Palestinian finance minister Salam Fayyad is to beg European leaders in Brussels for reinstatement of aid arrangements

When Salam Fayyad, the Palestinian finance minister, touches down in Brussels on Wednesday to meet with European leaders, he will be looking for one thing: A direct deposit into a single account.

In his first trip abroad since assuming the post last month, Mr Fayyad will seek to end a year-long embargo on the Palestinian Authority which saw billions of dollars in foreign aid bypass the former Hamas-led government and end up in dozens of different accounts.

Previously, all foreign aid was fed into a single treasury account, managed by the finance minister.

Under the embargo, cash tended to travel in plastic bags and would sometimes disappear. Instead of going to the Palestinian Authority, much of the money was given directly to individuals. Without transparency, spending spiralled.

What happened last year was totally irresponsible. There was serious and severe institutional degradation, said Mr Fayyad, a former official of the International Monetary Fund and internationally respected financier.

Though more aid was delivered to the Palestinians under Hamas than the year before, its impact was far less because it wasnt managed properly, he said. EU assistance alone increased to 700 million euros from around 500 million, but all of that money bypassed the treasury.

The Palestinian Authority is now operating on a quarter of the $160 million a month it needs to finance its activities, Mr Fayyad said.

Our financial policy right now is totally unsustainable. We just cannot go on like this, he told The Times.

His first act as finance minister, in the newly-forged Palestinian national unity government, was to reactivate the governments single treasury account. However, it remains to be seen whether European donors will be persuaded to use it.

The EU  the biggest donor to the Palestinians  has so far taken a wait-and-see approach towards lifting the embargo. However, there has been increasing unease over the effect the boycott has had on Palestinian coffers.

Those Ive met with have been extremely receptive and showed a great deal of understanding, he said But EU officials warned against expecting too much from his meeting on Wednesday with Benita Ferrero-Waldner, the European Unions external relations commissioner.

This is just one step in an long, exploratory process, one EU official said.

Mr Fayyad, who is 55, is one of a handful of officials from the Palestinian coalition government that the West is willing to deal with.

As finance minister under Yassir Arafat he was widely credited with clamping down on corruption.

In this term, he hopes to reduce the public sector payroll, end Israeli trade restrictions and stop aid dependency.

Under the previous Hamas-led government, Palestinians standard of living sharply declined: About 150 thousand public sector employees went without a steady paycheck and families were forced to dip into their savings, sell jewellery, or buy on credit to survive.

Palestinian analysts say despite the change in government, life has yet to improve.

Nothing has really changed. Banks havent changed their policies, people havent gotten paid, and politicians dont really have the answers yet, said Luay Shabaneh, president of the Palestinian Central Bureau of Statistics.

Mr Fayyad says hes acutely aware of the crisis, but estimates it will take up to six months to restore sound budget practices and regain the confidence of international donors.

In Brussels he will seek a massive intervention in aid as the EU debates lifting the embargo. But he also made it clear that he wont wait forever.

The Israelis have broken off contact with him. The United States and EU have made resumption of direct aid conditional on his government explicitly recognizing Israel, renouncing violence and accepting past peace deals.

Those objections frustrate him: We cant spend the rest of our lives talking about the governments platform, he said.

He also hinted if there wasnt a change in policy soon, he would consider his options.

If the world is still not prepared to find a way to deal with us through banks, I will not be able to function as Minister of finance, he said.

Were not going to sit here and be content with begging for money however we can get it, he said.

Of course they can get their aid restored, all they have to do is denounce terrorists and the terror tactics they seem to love. The other requirement would be to accept Israels right to exist as a free nation. Amen.

3
posted on 04/12/2007 3:15:13 AM PDT
by gakrak
("A wise man's heart is his right hand, But a fool's heart is at his left" Eccl 10:2)

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